Did you know, according to the Council of Mortgage Lenders (CML), that first time buyers accounted for approximately half of all house purchases financed by a mortgage in 2016?
For that reason, combined with the good news in the last budget about Stamp Duty, we felt it was worth having a deeper look at this interesting sector of the market.
Thanks to the "Bank of Mum and Dad"
According to research by L&G and Cebr, the “Bank of Mum and Dad” plays a significant role in helping raise deposits. It's estimated that parents will have contributed £6.7bn towards deposits in 2017 – enough to make them a top 10 lender.
This, supported by historically low interest rates along with government schemes such as Help to Buy and Help to Buy ISAs, contributes to the sector's growth.
Research from CML shows that the average first time buyer deposit has more than doubled since 2006 to £32,321 by 2016.
And another little fact by CML is that the average LTV for a first time buyer was 84% in England in 2016.
So, it’s easier for today’s generation...
Not only are the youth of today benefiting from this, data from the Office of National Statistics shows that in the 3 months to June 2017 a record number of people were in work in the UK.
Despite this, there's more pressure on finances today than ever before. Additional expenditure such as mobile phone contracts, broadband connections and satellite TV subscriptions are regular monthly bills. Missing a payment here or there can quickly build up to have bigger consequences.
Research from the Registry Trust found that CCJs issued in England and Wales rose by 41% in the first six months of 2017 compared to the same period in 2016.
However, the average value of each CCJ had fallen to £1,509 suggesting these additional bills are a major factor in the rising number of CCJs.
If your client has experienced previous financial difficulties, including CCJs or defaults, it doesn’t mean they can’t access competitive mortgage finance to purchase their first home.
To save time and hassle, brokers should be aware of which types of lenders could help support clients. This is typically where a specialist lender can help.